Netflix raises $1.3 billion in debt, fueling growth plans
LOS GATOS — Netflix on Wednesday raised $1.3 billion in debt, 30 percent more than the $1 billion the company originally sought as part of a multi-faceted expansion and growth gambit.
Among the potential uses of the debt offering are content acquisitions, capital expenditures, and investments, the video streaming giant said Wednesday.
Los Gatos-based Netflix appears to be on a significant growth mode that would likely be bolstered by the completed debt offering of $1.3 billion. In addition, Netflix this week gained a foothold in China’s video streaming market through a content licensing deal with a China-based firm.
The debt offering comes on the heels of a regulatory disclosure that Netflix has rewarded its top executives, including Chief Executive Officer Reed Hastings, with a bumper crop of pay raises.
Hastings harvested a compensation package in 2016 that brought the CEO $23.2 million in total direct pay, according to a regulatory filing this week from Netflix.
Hastings also cashed in big time with a gain of $105.4 million through the sale of stock options that Netflix had previously granted the company’s top boss.
The 2016 compensation package for Hastings amounted to a hefty increase of 39.5 percent in his total direct compensation compared to the $16.6 million in total pay the CEO corralled during 2015, the filing with the Securities and Exchange Commission shows.
“A Netflix without Reed Hastings would not have anywhere near the level of potential that it has with him, that’s what the pay raises show,” said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher.
Ted Sarandos, chief content officer with Netflix, landed $18.9 million in total direct pay in 2016, which was 35.3 percent higher than the rewards the company bestowed on him the year before.
Neil Hunt, chief product officer, received $8.8 million in total direct compensation in 2016, up 4.5 percent from 2015, the SEC documents show.
Greg Peters, international development officer, was awarded $8 million in 2016, a robust 43.1 percent increase from his compensation in 2015.
David Wells, Netflix’s chief financial officer, received $6.1 million, a 46.3 percent jump from his total direct pay the year before, according to the filing.
Sarandos also enjoyed a $5.6 million windfall from gains realized through the sale of stock options.
The basic salaries for Hastings, Hunt, Peters and Sarandos all declined, while Wells received an increase in his base salary. Hastings was paid a $900,000 salary, which was down 19.3 percent from 2015.
Hastings captured stock option awards in 2016 that totaled $22.3 million, which represented a 43.8 percent gain from the equity package he received in 2015.
During 2016, Netflix achieved an 8.2 percent gain in its shares. The Netflix stock managed to outperform, by a significant margin, the tech-focused Nasdaq Composite, which rose 7.5 percent.
So far in 2017, Netflix shares have soared 21.3 percent, well ahead of the Nasdaq, which is up a sturdy 11.9 percent.
Shares of Netflix tumbled 1.3 percent Wednesday and closed at $150.17. The shares all-time high was reached Tuesday, when Netflix closed at $152.16.
“Netflix is not only profitable, but they are growing their profits, and they are increasing their subscriptions as well,” Bajarin said.
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